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Is homeownership an 'elite privilege'?

Journalist: John Fitzsimons, Freelance

ended 02. November 2023

This week Yorkshire Building Society released a survey which suggested that the majority of people now believe owning your own home is becoming an ‘elite privilege’, out of the reach of many (https://www.mortgagesolutions.co.uk/news/2023/10/30/majority-of-borrowers-believe-homeownership-is-now-an-elite-privilege-ybs/)

  • I'd love to get your views on how prevalent this attitude is among your clients? Are you seeing despondency among your clients around their prospects for purchasing a home, whether they are FTBs or already on the market?
  • How do you go about countering this?
  • Are the people you see serious about getting a mortgage and therefore purchasing a home, or are they just testing the waters? Does this impact the chances of them sticking with the process even if they experience the odd hurdle along the way?
  • If this attitude is accurate, what does it mean for the future of the housing market? And what does it mean for brokers?

 

10 responses from the Newspage community

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Darryl Dhoffer
Founder at The Mortgage Geezer
Yes, I believe that homeownership is becoming an elite privilege. This is due to several factors, including rising house prices, stagnant wages, tight lending criteria, and the increasing cost of living.
I find that this attitude is very prevalent among my clients, especially first-time buyers. Many of them feel that homeownership is out of reach, and they are discouraged by the high cost of houses and the difficulty of getting a mortgage.
There are a lot of despondent consumers, with many of them feeling that they will never be able to afford to buy a home, and with rents jumping higher than Michael Jordan, many are already losing hope.
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Michelle Lawson
Director at Lawson Financial
It is quite easy to generalise/nationalise things like this but then also, the media has done a good job recently of scaring people off! They only seem to share the bad news and when the good news comes this is missed. Also, some people review social media and then speak to family without taking guidance from qualified invididuals. Home ownership is available for a good proportion of people if they are realistic and, as with most things, some people will not be able to buy now or in the future due to their circumstances. There are many schemes available which the public may not be aware of. The most important thing people can do is seek advice from a good broker who can talk them through what is available and help them to make plans.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
With the average house price being beyond what can be borrowed on the average wage most first time buyers cannot purchase without help from the bank of mum and dad. Usually this is a gifted deposit or rent free housing whilst saving or in some cases going on the mortgage to support higher affordability. House buying is also almost requiring two income either from a couple or friends buying jointly as one sole income is seldom sufficient to borrow the amount needed. Without the building of more genuinely affordable homes this situation will only get worse.
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Imran Hussain
Director at Harmony Financial Services
Without massive changes in the speed and methods by which new homes are built, homeownership will become only for the elite I work with many first time buyers who are borrowing nearly 10 times the amount their parents did for exactly the same homes this is purely down to not enough social or new homes being built which are actually affordable there are pockets of the country which have affordable homes but no job prospects and until we have a government or a housing minister who does not use the role as a stepping stone we will continue with this vicious cycle.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
Even in this market, and with the prevailing interest rates, homeownership remains within the grasp of those willing to put in the effort and make strategic sacrifices. For instance, the Help to Buy scheme enables FTBs to acquire a home with a mere 5% deposit, a tangible boost toward most peoples' homeownership dreams. On a separate note, shared ownership schemes also allow individuals to purchase a share of a property while paying rent on the remaining portion. Nevertheless, the value of homeownership extends beyond purely financial considerations. It is about providing stability, security, and a profound sense of belonging. Owning a home empowers one to lay down roots in their community and create a space that genuinely reflects their personality and lifestyle. It is indisputable that owning property has become more challenging in recent times. However, categorising it as an 'elite privilege' overlooks the array of support schemes that facilitate entry for first-time buyers (FTBs).
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Gary Bush
Financial Adviser at MortgageShop.com
Homeownership in the UK definitely isn't an elite privilege homebuyers just need to keep an open mind with their needs if their budget doesn't fit for the property that they want to purchase. Having, for a few decades, arranged a large number of Shared Ownership property purchases it's never been more true that First-Time-Buyers need to lower their expectations and utilise this excellent scheme in getting their feet on the ladder. With purchases possible with no deposit funds needed, there is no excuse to not take the plunge in buying a first home in 2023/24.
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Jamie Thompson
Mortgage Broker at Jamie Thompson Mortgages
There are certainly regional variations. I did an application for two first time buyers last week who earn £18,000 a year each. They are buying a nice flat on a nice street for £125,000 in the North East of England and aren’t even pushing anywhere near the maximum that they could afford to borrow in order to do so. People in their situation in the South of England stand virtually no chance though. Perhaps it’s just an elite privilege to those priced out in the South, ironically where more elite privilege tends to be found in the first place.
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David Robinson
Co-Founder at Wildcat Law
Right to buy extended home ownership via state subsidy, to those that had never previously been able to aspire to home ownership. Unfortunately, it left two lasting legacies:
1. Negligible remaining social housing - and nowhere near enough for current demand.
2. A wider expectation regarding home ownership.
Combine this with record average house costs to income, and you have a perfect storm for housing disappointment.
Forget wider home ownership, even those on average wages struggle to afford to buy. They typically carry high student debt and have to pay increasing rents whilst trying to save for significant mortgage deposits and the associated house-buying costs.
Unless you have wealthy family members able to assist you, homeownership for many in their twenties and thirties will remain a pipe dream.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
I don't believe that home ownership is becoming an elite privilege, but I do think that how people become homeowners is changing. Shared Ownership is one route to owning your first home that many don't know about but could be a great solution. Lenders are also stepping up to help with innovative products from the likes of Skipton and Gen H to try and tackle some of the main issues first-time buyers are facing. The key is to not assume and have an open-minded conversation with a mortgage broker about the available options. You may decide that none works for you right now, but you may also find something that does work for you, that you didn't know about.
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Gary Boakes
Director at Verve Financial
Purchasing a home has certainly become harder in the last few years, with rising interest rates, reduced affordability from lenders and rising house prices after covid have certainly meant that people are holding back from buying to see what changes the market may hold in 2024.

Rates are on a very slow decline but it is very unlikely that we are getting to the previous lows and this needs to be educated to buyers, if people are waiting for 2% rates again- they won't be buying any time soon.

Sellers are more likely to take offers at moment, so houses you maybe couldn't afforded 2 years ago now fit in your price bracket, this is a positive for FTB and maybe homemovers needing a big house.

The market is harder for Homemovers and remortgages as we have had the luxury or lower rates and a lifestyle to match for so long and the increase is a shock to the system but it is one we need to get used to.